A home seller’s self-styled ‘sarcastic’ emails and change of heart about whether to sell her home wasn’t enough to escape her obligation to pay her real estate broker’s commission, the Illinois Second District recently ruled.
In Clann Dilis, Ltd. v. Kilroy, 2015 IL App (2d) 15-0421-U, an unpublished case, the plaintiff broker and homeowner defendant signed an exclusive listing agreement to sell the defendant’s home that she co-owned with her ex-husband. The defendant’s divorce case with her ex was pending at the time the parties’ signed the listing agreement.
After some back and forth concerning the sales price, the broker ultimately found a buyer for the home willing to pay what was in the defendant’s price range. When the defendant rejected the offer, deciding instead to keep the home, the broker sued to recover her contractual commission – 6% of the sale price to the buyer.
After a bench trial, the circuit court entered a money judgment for the plaintiff of about $13K. The homeowner defendant appealed on the basis that the prospective buyer lacked financial ability to consummate the home purchase.
A: The proposed buyer located by the plaintiff offered $209,000 for the defendant’s home. This price was within the range previously authorized by the defendant in emails to the broker. E-mail evidence at trial showed the plaintiff willing to go as low as $199,000 in marketing the property. The defendant’s husband moved in the divorce case to compel the defendant to accept the offer and the divorce court granted the motion. Still, the defendant refused to sell; opting instead to buy out her ex-husband’s interest in the property.
Plaintiff then sued the defendant for breach of contract claiming she procured a suitable buyer for the property at a price assented to by the defendant.
Affirming the trial court’s judgment for plaintiff’s 6% commission, the Second District pronounced some key contract law principles that govern a real estate broker’s claim for a commission.
A breach of contract plaintiff must establish (1) the existence of a valid and enforceable contract, (2) performance by the plaintiff, (3) breach of contract by the defendant, and (4) damages resulting from the breach. Whether a breach has occurred is a question of fact that is left to the trial court’s decision. A court’s determination that a defendant breached a contract can’t be overturned unless the breach finding is unreasonable, arbitrary or not based on the evidence presented. (¶ 38.)
In the broker commission context, a broker earns her commission where she produces a ready, willing and able buyer. A buyer is deemed ready, willing and able if he (1) has agreed to buy the property, and (2) has sufficient funds on hand or is able to secure the necessary funds within the time set by the contract. A buyer lacks sufficient funds if he is depending on third parties to supply the funds and that third party isn’t legally bound to provide the funds to the buyer.
In addition, the sale to the would-be buyer doesn’t have to be consummated for the broker to be entitled to her commission. As long as the broker introduces a buyer that is able to buy the property on terms specified in a listing agreement, the broker has a right to her commission. (¶¶ 39, 49-50.)
Here, the trial court found that the buyer located by the plaintiff was a ready, willing and able one. The court pointed out that the buyer signed a contract to buy the property for $209,000, the buyer had obtained a preapproval letter from a mortgage lender committing to the purchase funds, and the defendant authorized the plaintiff to sell the property for less than $209,000. Taken together, these factors supported the trial court’s ruling that the broker furnished an acceptable buyer and was entitled to her commission.
This case’s simple fact pattern provides a clear illustration of the procuring cause doctrine: so long as a real estate broker provides a ready, willing and able buyer, she can recover her commission; even if the sale falls through.
The case also showcases the factors a court looks at when determining whether a given real estate buyer is financially capable of consummating a purchase.
Finally, from the evidence lens, the Kilroy case highlights the importance of e-mail admissions from a party and how they can often make or break a litigant’s case at trial.